By Aparajita Bharti

It is exciting to take plans from the drawing board to the field. Earlier this year, we rolled out one such project aimed at increasing digital payments adoption among small businesses in Barkat Nagar market, Jaipur. A large cluster of small and mid-sized shops along a busy railway line, the hustle and bustle of students thronging many coaching centres and street vendors moving up and down the streets to sell vegetables and local favourite snacks. Barktat Nagar is a market which could have existed in any tier 2 city in India, with its daily motions of a frantic rush at the dairy shop in the morning, the merchants starting their day with daily prayers, the lull in the afternoon and the chaotic evenings.

In this setting, we set out to enable Barkat Nagar�s merchants with digital payments solutions, to help them embrace the new age economy and increase their access to other financial services like credit, insurance etc. Our first challenge was to identify the right solutions that would serve the purpose of our target group. A market survey helped us identify �interoperability� as a key feature desired by merchants, so that they are able to accept all kinds of digital payments from customers. Our next step was to initiate conversations with various solutions that fit the bill, finally zeroing down on Axis Bank, E-paisa, FT Cash for payment solutions and Capital Float and Indifi for making credit available on adoption of FT Cash/E-paisa.

The Field Work

Our digital payment adoption drive started with our field team undertaking a door to door 3-day lead generation exercise visiting more than 400 merchants in the market. They were armed with two information brochures: one which described generic benefits of digital payments and another which gave a comprehensive comparison of participating solutions to help them identify the right solution for them. Owing to the support of Government of Rajasthan and the local market association, about 390 merchants readily spoke to our team to understand what was being offered.

To follow up on the leads generated, we inaugurated a three day camp in the local library, where teams of our partner solution providers were present to on-board merchants on their solutions. In addition to this, we also had two chai chowkis (tea-carts) going around the market reminding merchants about the payments camp as well as on-boarding those interested in the BHIM app.

The Challenges Faced

In the sweltering heat, as our teams accompanied chai chowkis to make conversation about the digital payments solutions over a cup of tea, many interesting insights were gathered. The first issue that stood out was upfront costs as being the biggest hurdle for adoption. The solution with the highest upfront cost was not able to convert any merchant even from the specific leads generated for them. Second, came the issue of trust that was voiced by many merchants. Some of them sighted hidden charges/non-transparent terms by banks as one of the main reasons for non-adoption. Third, a generational divide could be seen among businesses in Barkat Nagar. Even though the young shopkeepers seemed quite interested in moving to the digital space, they often couldn�t sign up because of their father�s veto on all business related decisions.

On BHIM, there was much enthusiasm among merchants and consumers, propelled by no upfront costs and higher trust in government owned solutions. However, even among those who wanted to adopt, there were several challenges. The first challenge was the non-availability of debit cards with shopkeepers. Even though, most of them have a debit card linked to their account, many did not carry it along all the time and seldom used it. One shopkeeper in fact remarked, that he keeps his debit card in the bank locker lest he loses it!

The second big challenge was linking a different mobile number to the bank account. In a place like Barkat Nagar, many people have more than one operational mobile number to be able to take advantage of the best telecom schemes available at any given point of time. They may not always carry the number their bank account is linked to, making it impossible for them to use BHIM.

The third challenge was the lack of space on phones. Even though BHIM is a very light app, many people were unable to delete other things from their phone to make space. Among mid-low income groups smart phones come with smaller memory space forcing them to prioritise different items on their phone. BHIM in many cases seemed to be lower in priority than music. At least for now!

Overall, even though shopkeepers were generally upbeat about BHIM as a solution because of no merchant discount rate (MDR) and transfer of funds directly to the bank account, they were discouraged by the fact that not enough customers have adopted this solution as yet.

While we hoped that at least a few street vendors would be interested in adopting BHIM, most of them voiced similar reasons for not adopting digital, namely: no demand for customers to transact digitally for low value items and their inability to pay their suppliers digitally.

The Achievement

Finally at the end of three days and several rounds of the market, we finally managed to convert 36 merchants (9 Axis Banks and 16 FT Cash) in addition to 28 merchants who adopted BHIM.

The conversion rate (~10%) was on par with standard conversation rates witnessed in other higher end markets. According to the sales teams of solution providers working with us, they wouldn�t have typically approached this type of a market which has smaller scale businesses and entrenched cash habits among customers. This probably indicates that the conversion was slightly higher than normal in the context of this demographic due to our active push.

Our teams have been following up consequently with both adopters and non-adopters to gauge the drop off or conversion rate, since after the camp. The findings have further thrown up the complexities in the procedures followed for document collection and lack of awareness of different features of solutions, for e.g. most merchants do not know how to use QR code on BHIM app.

Gaping Holes In The Road To Cashless

The merchant camp experience highlighted numerous barriers that continue to

exist in the path of digitization of masses. But beyond that, it gave us a sense of why the work that Catalyst is doing is so important. The fable of demonetization leading to higher acceptance of digital has begun to lose its sheen, as people go back to their old ways of transacting. There is almost no awareness of the potential of digital payments to act as a gateway to deeper financial services among the low to mid income group. Even though banking has reached this group, it is in most cases perceived as a tedious process, best not to be tinkered with for trying any new solution. The young generation curious to adopt new means is sufficiently cautioned by the older generation, who have been scarred previously by hidden charges of financial institutions. The cost of cash is hardly noticed, as time is not at a premium for this group.

Urgent need for financial literacy, building trust through the institution of common standards of transparency and tailoring solutions with the right cost structure for mid to low income groups is required to move the needle in digital payments. As a merchant put it succinctly, �aapne 20 minute laga diye humko ye sikhaane ke liye, 3 saal ke bacche ko bhi cash se khareedna aata hai, fir aap kehte hain ki ye easy hai� (You have taken 20 minutes to show us how this solution works, in contrast even a 3 year old knows how to transact in cash and you say this is easier than cash!)

Till businesses and policymakers together find answers to questions like these, less-cash India will alas remain a distant dream.

Also published on Medium.


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